Using PMI Data to Predict US Dollar Index Trends

This technical report discusses the application of Purchasing Managers’ Index (PMI) data in forecasting the direction of the US dollar index. It outlines how PMI indicators, such as new orders and future output, can serve as effective tools for investors in the foreign exchange market. The report details a methodology that combines various PMI indicators to produce a predictive model with a win rate of up to 64% over a three-year period. It explains the significance of the US dollar as a major global currency and its relationship with economic conditions. The report also examines the impact of US economic performance relative to other economies and the influence of uncertainty on currency strength. Additionally, it presents a multi-factor approach that incorporates interest rate differentials and sentiment indicators to enhance predictive accuracy. The findings suggest that PMI data can provide valuable insights for investors seeking to navigate fluctuations in the US dollar index.